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Economics (AS & A Level) · May / June 2026 · Paper 32 · Question 26

9708Exchange rates

'A depreciation of a country's currency leads initially to a worsening of its trade balance.' What helps to explain this?

  1. AThe demand for domestic exports is price elastic.
  2. BThe demand for domestic imports is price elastic.
  3. CThe supply of domestic exports is price elastic.
  4. DThe supply of domestic exports is price inelastic.

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Correct answer: D. The supply of domestic exports is price inelastic.

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